Life in the military brings a huge host of benefits. Chief among them is a stable income — even in a bad economy. There are a lot of financial perks that you can take advantage of while in the military, but it also requires some discipline on your part.
Managing your personal finances when you are serving is very important. When you finish up your career in the military you can be set for life if you properly take care of your finances.
With that in mind, here are several tips to help you get your finances in order so you can enjoy your retirement whenever it comes:
When you’re young and restless, it’s easy to fall into the debt trap. Try your best to avoid any unnecessary debt like buying a new car or using your credit card to pay for things. Save your money and pay cash as much as possible.
Credit cards are particularly damaging as you can end up on the so-called debt conveyor belt; you get trapped by making minimum payments because your early paychecks are small. Then you end up paying many multiple times in interest what you actually paid for the item.
Think about every purchase that you would have to use your credit card for and ask yourself if it is worth the debt.
Focus on saving money and take advantage of being in the military to get a great rate on a promotional CD that will help grow the little money you make.
Schedule your deposits so that you can pretend the money doesn’t even exist.
Take Advantage of Retirement Plans
As a military member, you have several generous options that you can participate in for retirement. One is the Thrift Savings Plan (TSP) and another is the Blended Retirement System (BRS). you can contribute up to $18,500 per year.
You should do your best to put in the maximum; this will leave you with a very nice nest egg after 20 years.
If you can’t afford to put in the max, then put in at least 5% of your income. The government will match it with another 5% — that increases your savings rate to 10%.
Be Ready for Deployment
A sudden and unplanned deployment can put a wrench in the works financially if you are not ready for it. So automate as much of your retirement savings as you can. Make sure your credit card payments will be done automatically, as well.
Having a portion of your pay go automatically into a savings account can help you keep an emergency fund for your family while you are deployed and maybe even for yourself for when you return.
Don’t Buy a House Too Young
If you join the military when you’re 18 then you can retire as early as age 38. This is still young enough to take on a 30 year mortgage for a house that you know you will be living in. If you’re younger than 38, then there’s always the possibility of being stationed far away and then needing to sell on the fly or rent it out. Both pose some complications that you don’t really want to be dealing with.
Wait until you are nearing your retirement and know where you’ll be for the foreseeable future — then take advantage of a first-time home buyer plan and the VA mortgage.
Having your money earn even more money is the ideal situation for anybody — but especially for those in the military. Though the pay is generally low compared to civilians, there are a lot of benefits that keep your cost of living down so you are able to put money into funds.
Take advantage and any extra money should be put into something safe and steady like index funds.
Get an Education
Use your education benefits to set yourself up for a great paying job when you are discharged or retired; the GI Bill and Montgomery GI Bill are worth tens of thousands of dollars in university credits. Plus the training you receive can be specialized so that you can be certified for any number of well-paying jobs.
Remember, the more seriously that you take the education opportunities provided to you, the more money you’ll make over the course of your life.
Photo Credit: The National Guard